New US tariffs on Chinese electric vehicles, batteries and solar cells could raise consumer prices

WASHINGTON — New tariffs on Chinese electric vehicles and batteries, solar cells, medical equipment and other goods are aimed at protecting American jobs and manufacturers. They could raise prices on some specific items, experts say, although a broad inflation impact is unlikely in the short term.

The tariffs will be phased in over the next three years, officials said. The measures coming into effect in 2024 include EVs and EV batteries, as well as solar cells, syringes, needles, steel and aluminum and more. Some would not come into effect until 2026.

The election-year tariffs could increase friction between the world’s two largest economies. China’s Foreign Ministry said in a statement that the tariffs “will seriously affect the atmosphere of bilateral cooperation.”

Government officials say they do not expect the tariffs to significantly escalate tensions between the two provinces, although China will likely explore ways to respond to the new taxes on its products.

President Joe Biden said Chinese government subsidies for electric vehicles and other consumer goods are cutting out Chinese companies from making profits, giving them an unfair advantage in global trade.

“For years, the Chinese government has poured state money into Chinese companies. It’s not competition, it’s cheating,” the Democratic president said at the White House on Tuesday.

The tariffs come amid the presidential campaign between Biden and his Republican predecessor, Donald Trump, as they battle to show who is toughest on China. The Biden administration has emphasized that its approach is more targeted and less inflationary than Trump’s proposed blanket tariffs.

Under the White House move, tariffs on electric cars from China will quadruple, from 25% to 100% this year.

There are currently very few electric vehicles from China in the US, but the Biden administration and US automakers are concerned that low-priced, heavily subsidized electric vehicles could soon flood the US market. China’s electric vehicle exports have grown by 70% between 2022 and 2023.

“A 100% tariff on electric vehicles will protect American manufacturers from China’s unfair trade practices,” the White House said in a statement.

John Bozzella, president and CEO of the Alliance for Automotive Innovation, a major industry group, applauded the White House action, saying it would help prevent the U.S. from becoming a “dumping ground” for subsidized Chinese EVs.

“We cannot allow China’s overcapacity problem to turn into a US auto industry problem,” he said.

While Chinese EVs are largely a future threat, tariffs on EV batteries could have a more immediate impact as China dominates the mining and processing of crucial minerals such as lithium, cobalt and graphite used in EV batteries.

U.S. automakers such as Ford and Tesla use lithium iron phosphate batteries made in China, said Sam Abuelsamid, chief mobility analyst at Guidehouse Insights.

Tesla uses battery cells from China’s Contemporary Amperex Technologies Ltd., or CATL, in versions of its Model 3 car. Ford uses CATL products in some versions of the F-150 Lightning electric pickup and the Mustang Mach E electric SUV.

Lithium iron phosphate batteries generally cost less, but don’t go as far per charge as the lithium-ion chemistry now used in most electric vehicles. However, they can handle fast charging more often than other battery chemistries.

Ford did not immediately respond to a question about battery tariffs, but said in a statement that it favors U.S. policies that support U.S. manufacturing and protect supply chains, national security and data privacy.

The tariffs could increase the cost of batteries and battery materials for electric vehicles, which would likely be passed on to consumers as part of the vehicle cost.

The price of solar panels may also increase as a result of the new rates. The rate for solar cells will increase from 25% to 50% in 2024.

The White House said China has used unfair practices to dominate more than 80% to 90% of the global solar supply chain. China’s policy is flooding global markets with artificially cheap solar panels, undermining investment in solar energy production outside China, the White House said.

Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, praised the Biden administration for stepping up to support the continued buildout of U.S. solar and storage manufacturing.

The administration was “thoughtful” in excluding tariffs on key machinery used to produce solar energy components in the United States, Hopper said. A temporary tariff exclusion will boost domestic production of solar products, she said.

Colorado Governor Jared Polis, a Democrat and clean energy advocate, was less optimistic. He called the tariffs on solar cells and other items “terrible news for American consumers and a major setback for clean energy.”

“Tariffs are a direct, regressive tax on Americans and this tax increase will affect every family,” Polis said on X, the social media site.

Tariffs on steel and aluminum products will triple in some cases, from current levels of zero to 7.5% to 25% by 2024. China controls more than 50% of global steel and aluminum production, and its products are among ‘ among the most low-carbon in the world’. intensively,” the White House said.

While the exact effect of the higher tariffs is uncertain, “tariffs do create a deadweight effect, so we can expect them to impose costs on the U.S. economy,” said Sarah Bauerle Danzman, an associate professor of international studies at Indiana University.

Still, “the certainty in price protection that these tariffs provide producers could lead to new investments in U.S. supply chains for these products,” she added.

Rates on syringes and needles will increase from zero to 50% in 2024, while for certain personal protective equipment, including some respirators and face masks, rates will increase from zero to 7.5% now to 25% in 2024. Rates on medical and medical rubber products Surgical gloves will increase in 2026.

Tariffs on needles and syringes should have no noticeable impact on U.S. supply, said Steve Brozak, a health care analyst and president of WBB Securities. New Jersey-based Becton, Dickinson and Co. is the largest supplier in the U.S., where production has increased since the COVID-19 pandemic, Brozak said.

The Food and Drug Administration said earlier this month that supply and production capacity for plastic syringes made outside China are sufficient to support current demand. The FDA had warned last fall that it was evaluating plastic syringes made in China for potential problems such as leaks and breakages. The agency has since recommended that suppliers avoid using these syringes if possible, reducing demand for the Chinese products.

Greta Peisch, a former Biden administration trade lawyer, said the tariffs will strengthen health and national security by ensuring domestic supplies of crucial medical equipment. “We can debate whether and how much prices will rise, but this will avoid a potential supply bottleneck” now and during a future pandemic, she said.

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Associated Press writers Tom Krisher in Detroit and Tom Murphy in Indianapolis contributed to this story.